What Does Financial Capacity Mean?

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What does Financial Capacity mean? Read on to discover the definition & meaning of the term Financial Capacity - to help you better understand the language used in insurance policies.

Financial Capacity

Financial Capacity

The financial limit of an organization's ability to absorb losses with its own funds or borrowed funds without major disruption. This value often comes into play when a risk manager attempts to find the appropriate retention amount. Any planned retention figures should fall below the financial capacity point.

We hope the you have a better understanding of the meaning of Financial Capacity.

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